KENT STEFFES VS MCCONELL CHEVROLET BUICK, INC. ET AL.

Tentative Rulings

Case Number: SC120814    Hearing Date: November 05, 2019    Dept: P

Los Angeles County Superior Court, Dept. P

TENTATIVE RULING

Kent Steffes v. McConnel Chevrolet Buick, Inc. et al. Case No.: SC120814

Motion to Enforce Settlement Agreement and Enter Stipulated Judgment (CCP 664.6)

Hearing Date: 11/5/2019

Plaintiff sued for nonpayment of a loan. In October 2015, the parties settled the lawsuit. Under the terms of the agreement, defendants were to pay $72,000.00 in monthly installment payments. The parties also executed a stipulated judgment for $150,000.00, which would be filed if defendants failed to make the agreed-upon payments. Plaintiff moves to enforce the settlement agreement and enter stipulated judgment for $150,000, claiming defendants failed to make payments from December 2018 through February 2019.

Cal. Code of Civ. Proc. §664.6 permits a court to enter judgment pursuant to the terms of a settlement agreement between parties, and to retain jurisdiction over a dismissed matter in order to enforce such an agreement.

A liquidated damage clause is unenforceable “if it bears no reasonable relationship to the range of actual damages that the parties could have anticipated would flow from a breach.” Greentree Financial Group, Inc. v. Execute Sports, Inc. (2008) 163 Cal.App.4^th 495, 499. In the case of a settlement agreement, a liquidated damages clause must “anticipate the damages that might flow from a breach of the stipulation (memorializing a settlement agreement),” but not from the damages occurring through breach of the underlying contract. Id.

Here, as in Greentree, the provision providing for recovery of $150,000.00 is based on damages that would flow from a breach of the underlying contract, rather than a breach of the settlement agreement. Plaintiff cites Jade Fashion 7 Co., Inc. v. Harkham Industries, Inc. (2014) 229 Cal.App.4^th 635, 650, which held a settlement agreement providing for full payment of a debt is enforceable if a settling defendant defaults on an agreement to pay less than the full amount owed. However, the settlement in Jade “was not an agreement to settle or compromise a disputed claim. Rather, it was an agreement to forbear on the collection of a debt that was admittedly owed for goods[.]” Here, unlike Jade, the settlement agreement was a compromise of a disputed claim. The Jade rule does not apply. The provision in the settlement agreement increasing the amount owed from $72,000.00 to $150,000.00 upon default constitutes an unenforceable penalty under Greentree.

Defendants must pay the remaining unpaid portion of the agreed-upon $72,000.00 settlement, as well as 10% interest from October 1, 2015. Plaintiff’s exhibit G shows $16,875.00 remains owing. With interest, the total owed is $23,763.70. Judgment to be entered for plaintiff and against defendants for $23,763.70.